EX-99.3 3 a20250331tacex993financial.htm EX-99.3

Document

Condensed Consolidated Statements of Earnings

(in millions of Canadian dollars except where noted)

						3 months ended March 31
Unaudited									2025						2024
Revenues (Note 3)									758						947
Fuel and purchased power (Note 4)									277						323
Carbon compliance (Note 4)									49						40
Gross margin									432						584
Operations, maintenance and administration (Note 4)									173						134
Depreciation and amortization									146						124
Asset impairment charges (Note 5)									15						1
Taxes, other than income taxes									12						8
Net other operating income									(14)						(12)
Operating income									100						329
Equity income									2						1
Fair value change in contingent consideration payable (Note 5)									34						—
Finance lease income									6						2
Interest income									5						7
Interest expense (Note 6)									(93)						(69)
Foreign exchange loss									(4)						(5)
(Loss) gain on sale of assets and other									(1)						2
Earnings before income taxes									49						267
Income tax expense (Note 7)									7						29
Net earnings									42						238
Net earnings attributable to:
Common shareholders									46						222
Non-controlling interests (Note 8)									(4)						16
									42						238
Weighted average number of common shares outstanding in the period (millions)									298						308
Net earnings per share attributable to common shareholders, basic and diluted (Note 15)									0.15						0.72

See accompanying notes.

TransAlta Corporation F1

Condensed Consolidated Statements of Comprehensive Income

(in millions of Canadian dollars)

						3 months ended March 31
Unaudited									2025						2024
Net earnings									42						238
Other comprehensive income
Net actuarial gains on defined benefit plans, net of tax(1)									—						7
Total items that will not be reclassified subsequently to net earnings									—						7
(Losses) gains on translating net assets of foreign operations, net of tax									(1)						6
Gains (losses) on financial instruments designated as hedges of foreign operations, net of tax(2)									1						(10)
(Losses) gains on derivatives designated as cash flow hedges, net of tax(3)									(1)						46
Reclassification of (gains) losses on derivatives designated as cash flow hedges to net earnings, net of tax(4)									(9)						38
Total items that will be reclassified subsequently to net earnings									(10)						80
Other comprehensive (loss) income									(10)						87
Total comprehensive income									32						325
Total comprehensive income attributable to:
TransAlta shareholders									36						309
Non-controlling interests (Note 8)									(4)						16
									32						325

(1)Net of income tax expense of nil for the three months ended March 31, 2025 (March 31, 2024 — $2 million expense).

(2)Net of income tax expense of nil for the three months ended March 31, 2025 (March 31, 2024 — $1 million recovery).

(3)Net of income tax expense of nil for the three months ended March 31, 2025 (March 31, 2024 — $12 million expense).

(4)Net of reclassification of income tax recovery of $2 million for the three months ended March 31, 2025 (March 31, 2024 — $10 million expense).

See accompanying notes.

F2 TransAlta Corporation

Condensed Consolidated Statements of Financial Position

(in millions of Canadian dollars)

Unaudited			March 31, 2025						Dec. 31, 2024
Current assets
Cash and cash equivalents			238						337
Restricted cash (Note 14)			51						69
Trade and other receivables (Note 9)			873						767
Prepaid expenses and other			91						68
Risk management assets (Note 11 and 12)			297						318
Inventory			133						134
Assets held for sale			77						80
			1,760						1,773
Non-current assets
Investments			147						159
Long-term portion of finance lease receivables			297						305
Risk management assets (Note 11 and 12)			110						93
Property, plant and equipment (Note 13)			5,918						6,020
Right-of-use assets			120						120
Intangible assets			278						281
Goodwill			517						517
Deferred income tax assets			55						52
Long-term financial assets (Note 10)			105						—
Other assets			176						179
Total assets			9,483						9,499
Current liabilities
Bank overdraft			—						1
Accounts payable, accrued liabilities and other current liabilities (Note 9)			751						756
Current portion of decommissioning and other provisions			87						83
Risk management liabilities (Note 11 and 12)			235						277
Dividends payable (Note 15 and 16)			37						49
Exchangeable securities			750						750
Contingent consideration payable			48						81
Current portion of credit facilities, long-term debt and lease liabilities (Note 14)			178						572
			2,086						2,569
Non-current liabilities
Credit facilities, long-term debt and lease liabilities (Note 14)			3,699						3,236
Decommissioning and other provisions			856						850
Deferred income tax liabilities			466						470
Risk management liabilities (Note 11 and 12)			336						305
Contract liabilities			25						24
Defined benefit obligation and other long-term liabilities			190						202
Equity
Common shares (Note 15)			3,163						3,179
Preferred shares (Note 16)			942						942
Contributed surplus			29						42
Deficit			(2,433)						(2,458)
Accumulated other comprehensive income			31						41
Equity attributable to shareholders			1,732						1,746
Non-controlling interests (Note 8)			93						97
Total equity			1,825						1,843
Total liabilities and equity			9,483						9,499

Commitments and contingencies (Note 17)

See accompanying notes.

TransAlta Corporation F3

Condensed Consolidated Statements of Changes in Equity

(in millions of Canadian dollars)

Unaudited 3 months ended March 31, 2025			Common shares			Preferred shares			Contributed surplus			Deficit			Accumulated other comprehensive income (loss)			Attributable to shareholders			Attributable to non-controlling interests			Total
Balance, Dec. 31, 2024			3,179			942			42			(2,458)			41			1,746			97			1,843
Net earnings			—			—			—			46			—			46			(4)			42
Other comprehensive income:
Net losses on derivatives designated as cash flow hedges, net of tax			—			—			—			—			(10)			(10)			—			(10)
Total comprehensive income			—			—			—			46			(10)			36			(4)			32
Common share dividends (Note 15)			—			—			—			(20)			—			(20)			—			(20)
Shares purchased under normal course issuer bid (NCIB) (Note 15)			(3)			—			—			(1)			—			(4)			—			(4)
Provision for repurchase of shares under the automatic securities purchase plan (ASPP) (Note 15)			(20)			—			—			—			—			(20)			—			(20)
Share-based payment plans and stock options exercised			7			—			(13)			—			—			(6)			—			(6)
Balance, March 31, 2025			3,163			942			29			(2,433)			31			1,732			93			1,825

3 months ended March 31, 2024			Common shares			Preferred shares			Contributed surplus			Deficit			Accumulated other comprehensive income (loss)(1)			Attributable to shareholders			Attributable to non-controlling interests			Total
Balance, Dec. 31, 2023			3,285			942			41			(2,567)			(164)			1,537			127			1,664
Net earnings			—			—			—			222			—			222			16			238
Other comprehensive income:
Net losses on translating net assets of foreign operations, net of hedges and tax			—			—			—			—			(4)			(4)			—			(4)
Net gains on derivatives designated as cash flow hedges, net of tax			—			—			—			—			84			84			—			84
Net actuarial gains on defined benefits plans, net of tax			—			—			—			—			7			7			—			7
Total comprehensive income			—			—			—			222			87			309			16			325
Shares purchased under NCIB (Note 15)			(37)			—			—			5			—			(32)			—			(32)
Provision for repurchase of shares under the ASPP (Note 15)			(3)			—			—			—			—			(3)			—			(3)
Share-based payment plans and stock options exercised			13			—			(16)			—			—			(3)			—			(3)
Distributions declared to non-controlling interests (Note 8)			—			—			—			—			—			—			(19)			(19)
Balance, March 31, 2024			3,258			942			25			(2,340)			(77)			1,808			124			1,932

See accompanying notes.

F4 TransAlta Corporation

Condensed Consolidated Statements of Cash Flows

(in millions of Canadian dollars)

						3 months ended March 31
Unaudited									2025						2024
Operating activities
Net earnings									42						238
Depreciation and amortization									146						124
Accretion of provisions (Note 6)									15						12
Decommissioning and restoration costs settled									(9)						(7)
Deferred income tax expense (Note 7)									(6)						2
Unrealized gain from risk management activities									(12)						(125)
Unrealized foreign exchange loss (gain)									—						(4)
Provisions and contract liabilities									(32)						—
Asset impairment charges (Note 5)									15						1
Equity loss, net of distributions from investments									—						1
Other non-cash items									(35)						(5)
Cash flow from operations before changes in working capital									124						237
Change in non-cash operating working capital balances									(117)						7
Cash flow from operating activities									7						244
Investing activities
Additions to property, plant and equipment (Note 13)									(32)						(68)
Additions to intangible assets									(2)						(1)
Restricted cash (Note 14)									18						22
Loan advances									(3)						—
Acquisitions, net of cash acquired									(2)						—
Increase in Long-term financial assets (Note 10)									(106)						—
Proceeds on sale of property, plant and equipment									—						1
Decrease in finance lease receivable									8						5
Other									(4)						12
Change in non-cash investing working capital balances									(21)						(29)
Cash flow used in investing activities									(144)						(58)
Financing activities
Net decrease in borrowings under credit facilities (Note 14)									(347)						—
Repayment of long-term debt (Note 14)									(26)						(29)
Issuance of long-term debt (Note 14)									450						—
Dividends paid on common shares (Note 15)									(18)						(17)
Dividends paid on preferred shares (Note 16)									(13)						(13)
Repurchase of common shares under NCIB (Note 15)									(3)						(32)
Proceeds on issuance of common shares (Note 15)									—						3
Distributions paid to subsidiaries' non-controlling interests (Note 8)									—						(19)
Decrease in lease liabilities									(1)						(1)
Financing fees and other									(4)						—
Change in non-cash financing working capital balances									—						(6)
Cash flow from (used in) financing activities									38						(114)
Cash flow (used in) from operating, investing and financing activities									(99)						72
Effect of translation on foreign currency cash									—						(1)
(Decrease) increase in cash and cash equivalents									(99)						71
Cash and cash equivalents, beginning of period									337						348
Cash and cash equivalents, end of period									238						419
Cash taxes paid									67						12
Cash interest paid									64						58
Cash interest received									4						6

See accompanying notes.

TransAlta Corporation F5

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of Canadian dollars, except as otherwise noted)

1. Corporate Information

A. Description of the Business

TransAlta Corporation (TransAlta or the Company) was incorporated under the Canada Business Corporations Act in March 1985 and became a public company in December 1992. The Company's head office is located in Calgary, Alberta.

B. Basis of Preparation 

These unaudited interim condensed consolidated financial statements have been prepared in compliance with International Financial Reporting Standard (IFRS) and International Accounting Standard (IAS) 34 Interim Financial Reporting using the same accounting policies as those used in the Company's most recent audited annual consolidated financial statements. These unaudited interim condensed consolidated financial statements do not include all of the disclosures included in the Company's audited annual consolidated financial statements. Accordingly, they should be read in conjunction with the Company's most recent audited annual consolidated financial statements which are available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

The unaudited interim condensed consolidated financial statements include the accounts of the Company and the subsidiaries that it controls.

The unaudited interim condensed consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments, which are stated at fair value.

These unaudited interim condensed consolidated financial statements reflect all adjustments which consist of normal recurring adjustments and accruals that are, in the opinion of management, necessary for a fair presentation of results. Interim results will fluctuate due to plant maintenance schedules, the seasonal demands for electricity and changes in energy prices. Consequently, interim condensed results are not necessarily indicative of annual results. TransAlta’s results are partly seasonal due

to the nature of the electricity market and related fuel costs.

These unaudited interim condensed consolidated financial statements were authorized for issue by the Audit, Finance and Risk Committee on behalf of TransAlta's Board of Directors (the Board) on May 6, 2025.

C. Significant Accounting Judgements and Key Sources of Estimation Uncertainty

The preparation of these unaudited interim condensed consolidated financial statements in accordance with IAS 34 requires management to use judgment and make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosures of contingent assets and liabilities. These estimates are subject to uncertainty. Actual results could differ from these estimates due to factors such as fluctuations in interest rates, foreign exchange rates, inflation and commodity prices, and changes in economic conditions, legislation and regulations.

In the process of applying the Company’s accounting policies, management has to make judgments and estimates about matters that are highly uncertain at the time the estimate is made and that could significantly affect the amounts recognized in the unaudited interim condensed consolidated financial statements. Different estimates with respect to key variables used in the calculations, or changes to estimates, could potentially have a material impact on the Company’s financial position or performance.

Throughout the first quarter of 2025, President Trump has continued to announce, implement and at times, withdraw tariffs across various sectors and countries. As of April 2, 2025, Canada-United States-Mexico Agreement (CUSMA) compliant goods are exempt from tariffs; however, they remain for non-CUSMA compliant goods, aluminum and steel imports, as well as the automotive sector. At this time, tariffs do not apply to cross border sales of electricity. If tariffs remain in effect, the Company may see an impact on the cost of materials required for

F6 TransAlta Corporation

ongoing operations and future growth projects. The Company continues to assess the direct and indirect impact of tariffs or other trade protectionist measures on our business.

During the three months ended March 31, 2025, revisions to the fair values of Assets Held for Sale and Contingent

consideration payable were made based on new information obtained during the period.

Refer to Note 2(Q) of the Company's 2024 audited annual consolidated financial statements for further details on the significant accounting judgments and key sources of estimation uncertainty.

2. Accounting Changes

The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended Dec. 31, 2024.

A. Future Accounting Changes

The Company closely monitors both new accounting standards and amendments to existing accounting standards issued by the IASB. The following standards have been issued but are not yet in effect.

Amendments to IFRS 9 and IFRS 7 — Nature-Dependent Electricity Contracts

On Dec. 18, 2024, the IASB issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosure to improve reporting of the financial effects of nature-dependent electricity (e.g., wind and solar) contracts, which are often structured as power purchase agreements. Under these contracts, the amount of electricity generated can vary based on uncontrollable factors such as weather conditions. The amendments clarify the application of own-use requirements, permit hedge accounting if these contracts are used as hedging instruments and add new disclosure requirements about the effect of these contracts on a company's financial performance and cash flows. The amendments are effective for annual reporting periods beginning on or after Jan. 1, 2026. The Company is currently evaluating the impacts to the financial statements.

Amendments to IFRS 7 and IFRS 9 — Classification and Measurement of Financial Instruments 

On May 29, 2024, the IASB issued Amendments to the Classification and Measurement of Financial Instruments effective Jan. 1, 2026 impacting IFRS 7 and 9. The IASB amended the requirements related to settling financial liabilities using an electronic payment system and assessing contractual cash flow characteristics of financial assets, including those with ESG-linked features. The Company is currently evaluating the impacts to the financial statements.

IFRS 18 — Presentation and Disclosure in Financial Statements 

On April 9, 2024, the IASB issued a new standard, IFRS 18 Presentation and Disclosure in Financial Statements, which introduced new requirements for improved comparability in the statement of profit or loss, enhanced transparency of management-defined performance measures and more useful grouping of information in the financial statements. The standard is effective for annual reporting periods beginning on or after Jan. 1, 2027. The Company is currently evaluating the impacts to the financial statements.

B. Comparative Figures

Certain comparative figures have been reclassified to conform to the current period’s presentation. These reclassifications did not impact previously reported net earnings.

TransAlta Corporation F7

3. Revenue

A. Disaggregation of Revenue

The majority of the Company's revenues are derived from the sale of power, capacity and environmental and tax attributes, and from asset optimization activities, which

the Company disaggregates into the following groups for the purpose of determining how economic factors affect the recognition of revenue.

3 months ended March 31, 2025			Hydro			Wind & Solar			Gas			Energy Transition			Energy Marketing			Corporate(1)			Total
Revenues from contracts with customers
Power and other			5			82			162			3			4			2			258
Environmental and tax attributes(2)			10			26			7			—			—			(1)			42
Revenue from contracts with customers			15			108			169			3			4			1			300
Revenue from derivatives and other trading activities(3)			22			(33)			103			63			23			—			178
Revenue from merchant sales			47			20			115			88			—			—			270
Other(4)			2			5			3			—			—			—			10
Total revenue			86			100			390			154			27			1			758
Revenues from contracts with customers
Timing of revenue recognition
At a point in time			10			9			7			3			—			(1)			28
Over time			5			99			162			—			4			2			272
Total revenue from contracts with customers			15			108			169			3			4			1			300

(1)The elimination of intercompany sales is reflected in the Corporate segment.

(2)The environmental and tax attributes represent environmental attributes and production tax transfer sales not bundled with power and other sales.

(3)Represents realized and unrealized gains or losses from hedging and derivative positions. Volatility and pricing in commodity markets can vary significantly from period to period and impact movements in derivative positions.

(4)Other revenue includes production tax credits related to U.S. wind facilities subject to tax equity financing arrangements, total lease income from long-term contracts that meet the criteria of operating leases and other miscellaneous revenues.

F8 TransAlta Corporation

3 months ended March 31, 2024			Hydro			Wind & Solar			Gas			Energy Transition			Energy Marketing			Corporate			Total
Revenues from contracts with customers
Power and other			5			70			112			3			—			—			190
Environmental and tax attributes(1)			14			18			—			—			—			—			32
Revenue from contracts with customers			19			88			112			3			—			—			222
Revenue from derivatives and other trading activities(2)			6			21			88			70			52			—			237
Revenue from merchant sales			83			20			222			144			—			—			469
Other(3)			4			4			11			—			—			—			19
Total revenue			112			133			433			217			52			—			947
Revenues from contracts with customers
Timing of revenue recognition
At a point in time			14			18			—			3			—			—			35
Over time			5			70			112			—			—			—			187
Total revenue from contracts with customers			19			88			112			3			—			—			222

(1)The environmental and tax attributes represent environmental attributes and production tax transfer sales not bundled with power and other sales.

(2)Represents realized and unrealized gains or losses from hedging and derivative positions. Volatility and pricing in commodity markets can vary significantly from period to period and impact movements in derivative positions.

(3)Other revenue includes production tax credits related to US wind facilities subject to tax equity financing arrangements, total lease income from long-term contracts that meet the criteria of operating leases and other miscellaneous revenues. In the Gas segment, $7 million of Revenue from leases was reclassified to Other to conform to the current period presentation.

TransAlta Corporation F9

4. Expenses by Nature

Fuel, Purchased Power and Operations, Maintenance and Administration (OM&A)

Fuel and purchased power and OM&A expenses classified by nature are as follows:

3 months ended March 31									2025						2024
															Fuel and purchased power			OM&A			Fuel and purchased power			OM&A
Gas fuel costs															142			—			109			—
Coal fuel costs															44			—			34			—
Royalty, land lease, other direct costs															6			—			8			—
Purchased power															85			—			172			—
Salaries and benefits															—			76			—			65
Other operating expenses															—			97			—			69
Total															277			173			323			134

OM&A

OM&A expenses for the three months ended March 31, 2025 was $173 million (March 31, 2024 — $134 million) and included spending to support strategic and growth initiatives, spending related to the addition of the Heartland facilities and associated corporate costs and spending related to the planning and design of an upgrade to the Company's enterprise resource planning (ERP) system.

Carbon Compliance

As at March 31, 2025, the Company holds 748,537 emission credits in inventory that were purchased externally with a recorded book value of $29 million (Dec. 31, 2024 — 460,585 emission credits with a recorded

book value of $18 million). The Company also has 2,123,564 (Dec. 31, 2024 — 2,109,491) of internally generated eligible emission credits from the Company's Wind and Solar and Hydro segments which have no recorded book value.

Emission credits can be sold externally or can be used to offset future emission obligations from our gas facilities located in Alberta, where the compliance price of carbon is expected to increase, resulting in a reduced cash cost for carbon compliance in the year of settlement. The compliance price of carbon for the 2024 obligation was $80 per tonne. It increased to $95 per tonne in 2025.

F10 TransAlta Corporation

5. Asset Impairment Charges

The Company recognized the following asset impairment (reversals) charges:

3 months ended March 31									2025						2024
Segments:
Energy Transition asset impairment reversal									(31)						—
Gas asset impairment charge									34						—
Changes in decommissioning and restoration provisions on retired assets(1)									7						(3)
Project development costs(2)									5						4
Asset impairment charges									15						1

(1)During the three months ended March 31, 2025, the Company recorded asset impairment charges due to changes in discount rates and cash flow revisions on retired assets (March 31, 2024 — reversal).

(2)During the three months ended March 31, 2025 and March 31, 2024, the Company recognized an impairment charge in the Corporate segment related to projects that are no longer proceeding.

Energy Transition Equipment Sale

On March 20, 2025, the Company entered into an agreement to sell generation equipment that had previously been impaired in the energy transition segment with closing of the sale expected during the third quarter of 2025. During the three months ended March 31, 2025, the Company recorded an asset impairment reversal of $31 million for a previously recognized impairment loss and transferred the respective generation equipment to assets held for sale.

Planned Divestiture

During the three months ended March 31, 2025, the Company recognized an impairment loss of $34 million in the gas segment on the planned divestiture of certain Heartland assets held for sale based on updated expectations of the fair value less costs to sell. A corresponding reduction in the contingent consideration payable was also recognized.

6. Interest Expense

The components of interest expense are as follows:

3 months ended March 31			2025						2024
Interest on debt			51						49
Interest on exchangeable debentures(1)			6						7
Interest on exchangeable preferred shares(2)			7						7
Capitalized interest (Note 13)			—						(14)
Interest on lease liabilities			5						2
Credit facility fees, bank charges and other interest			9						6
Accretion of provisions			15						12
Interest expense			93						69

(1)On May 1, 2019, Brookfield invested $350 million in exchange for seven per cent unsecured subordinated debentures due May 1, 2039.

(2)On Oct. 30, 2020, Brookfield invested $400 million in the Company in exchange for redeemable, retractable first preferred shares (Series I). The Series I Preferred Shares are accounted for as current debt and the exchangeable preferred share dividends are reported as interest expense. On April 23, 2025, the Company declared a dividend of $7 million in aggregate on the Series I Preferred Shares at the fixed rate of 1.726 per cent, per share, payable on June 2, 2025.

TransAlta Corporation F11

7. Income Taxes

The components of income tax expense are as follows:

3 months ended March 31			2025						2024
Current income tax expense			13						27
Deferred income tax (recovery) expense related to the origination and reversal of temporary differences			(12)						29
Write-down (reversal) of unrecognized deferred income tax assets(1)			6						(27)
Income tax expense			7						29
Current income tax expense			13						27
Deferred income tax (recovery) expense			(6)						2
Income tax expense			7						29

(1)During the three months ended March 31, 2025, the Company recorded a write-down of deferred tax assets of $6 million (March 31, 2024 — $27 million reversal of write-down). The deferred income tax assets mainly relate to the tax benefits associated with tax losses related to the Company's directly owned U.S. operations and other deductible differences.

F12 TransAlta Corporation

8. Non-Controlling Interests

The Company’s subsidiaries and operations that have non-controlling interests are as follows:

Subsidiary/Operation			Non-controlling interest owner						NCI as at March 31, 2025			NCI as at Dec. 31, 2024			NCI as at March 31, 2024
TransAlta Cogeneration LP			Canadian Power Holdings Inc.						49.99%			49.99%			49.99%
Kent Hills Wind LP			Natural Forces Technologies Inc.						17%			17%			17%

TransAlta Cogeneration, LP (TA Cogen) operates a portfolio of cogeneration facilities in Canada and owns 50 per cent of Sheerness, a dual-fuel generating facility.

Kent Hills Wind LP, a subsidiary, owns and operates the 167 MW Kent Hills (1, 2 and 3) wind facilities located in New Brunswick.

Summarized financial information relating to subsidiaries with significant non-controlling interests is as follows:

3 months ended March 31			2025			2024
Net earnings attributable to non-controlling interests
TransAlta Cogeneration L.P.			(5)			16
Kent Hills Wind LP			1			—
			(4)			16
Total comprehensive income attributable to non-controlling interests
TransAlta Cogeneration L.P.			(5)			16
Kent Hills Wind LP			1			—
			(4)			16
Distributions paid to non-controlling interests
TransAlta Cogeneration L.P.			—			19
Kent Hills Wind LP			—			—
			—			19

As at			March 31, 2025						Dec. 31, 2024
Equity attributable to non-controlling interests
TransAlta Cogeneration L.P.			(41)						(46)
Kent Hills Wind LP			(52)						(51)
			(93)						(97)

TransAlta Corporation F13

9. Trade and Other Receivables and Accounts Payable, Accrued liabilities and Other Current Liabilities

			March 31, 2025			Dec. 31, 2024
Trade accounts receivable			619			570
Collateral provided (Note 12)			148			124
Current portion of finance lease receivables			30			30
Current portion of loan receivable			—			1
Income taxes receivable			76			42
Trade and other receivables			873			767

			March 31, 2025			Dec. 31, 2024
Accounts payable and accrued liabilities			675			694
Income taxes payable			5			23
Interest payable			24			17
Current portion of contract liabilities			18			12
Liabilities Held for Sale			8			1
Collateral held (Note 12)			21			9
Accounts payable, accrued liabilities and other current liabilities			751			756

F14 TransAlta Corporation

10. Long-Term Financial Assets

Nova Clean Energy, LLC

During the first quarter of 2025, the Company made available a US$75 million term loan and a US$100 million revolving facility to Nova Clean Energy, LLC (Nova), a developer of renewable energy projects. As at March 31, 2025, US$25M and US$49M have been drawn from the term loan and revolving facility, respectively. These facilities are classified as financial assets measured at Fair Value Through Profit and Loss (FVTPL). The outstanding principal under the term loan and the revolving facility bear interest of seven per cent per annum with interest paid quarterly. The terms of the term loan and the revolving

facility are six and five years, respectively, unless accelerated. The term loan is convertible to equity at any time at the option of the Company and any remaining unused term loan commitments at the time of conversion would be terminated. The term loan and revolving facility are subject to customary financing conditions and covenants that may restrict Nova's ability to access funds. This investment in Nova provides the Company with the exclusive right to purchase Nova's late-stage development projects in the western U.S.

11. Financial Instruments

A. Financial Assets and Liabilities — Classification and Measurement

Financial assets and financial liabilities are measured on an ongoing basis at cost, fair value or amortized cost.

B. Fair Value of Financial Instruments

I. Level I, II and III Fair Value Measurements

The Level I, II and III classifications in the fair value hierarchy used by the Company are defined below. The fair value measurement of a financial instrument is included in only one of the three levels, the determination of which is based on the lowest level input that is significant to the derivation of the fair value. The Level III classification is the lowest level classification in the fair value hierarchy.

a. Level I

Fair values are determined using inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

b. Level II

Fair values are determined, directly or indirectly, using inputs that are observable for the asset or liability.

Fair values falling within the Level II category are determined through the use of quoted prices in active markets, which in some cases are adjusted for factors specific to the asset or liability, such as basis, credit valuation and location differentials.

The Company’s commodity risk management Level II financial instruments include over-the-counter derivatives with values based on observable commodity futures curves and derivatives with inputs validated by broker quotes or other publicly available market data providers.

Level II fair values are also determined using valuation techniques, such as option pricing models and interpolation formulas, where the inputs are readily observable.

In determining Level II fair values of other risk management assets and liabilities, the Company uses observable inputs other than unadjusted quoted prices that are observable for the asset or liability, such as interest rate yield curves and currency rates. For certain financial instruments where insufficient trading volume or lack of recent trades exists, the Company relies on similar interest or currency rate inputs and other third-party information such as credit spreads.

c. Level III

Fair values are determined using inputs for the assets or liabilities that are not readily observable.

For assets and liabilities that are recognized at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Other than the long-term financial assets discussed in Section IV below, there were no changes in the Company's valuation processes, valuation techniques and types of inputs used in the fair value measurements during the period. Refer to Note 14 of the 2024 audited annual consolidated financial statements for further details.

II. Commodity Risk Management Assets and Liabilities

Commodity risk management assets and liabilities include risk management assets and liabilities that are used in the energy marketing and generation segments in relation to trading activities and certain contracting activities. To the

TransAlta Corporation F15

extent applicable, changes in net risk management assets and liabilities for non-hedge positions are reflected within earnings of these businesses.

Commodity risk management assets and liabilities classified by fair value levels as at March 31, 2025, are as follows: Level I — $11 million net liability (Dec. 31, 2024 — $12 million net liability), Level II — $49 million net asset (Dec. 31, 2024 — $2 million net liability) and Level III —

$207 million net liability (Dec. 31, 2024 — $153 million net liability).

Significant changes in commodity net risk management assets (liabilities) during the three months ended March 31, 2025, are primarily attributable volatility in market prices across multiple markets on both existing contracts and new contracts and contract settlements.

The following table summarizes the key factors impacting the fair value of the Level III commodity risk management assets and liabilities by classification during the three months ended March 31, 2025 and 2024, respectively:

			3 months ended March 31, 2025												3 months ended March 31, 2024
			Hedge			Non-hedge			Total						Hedge			Non-hedge			Total
Opening balance			—			(153)			(153)						—			(147)			(147)
Changes attributable to:
Market price changes on existing contracts			—			(43)			(43)						—			62			62
Market price changes on new contracts			—			1			1						—			3			3
Contracts settled			—			(13)			(13)						—			(3)			(3)
Change in foreign exchange rates			—			1			1						—			5			5
Net risk management liabilities at end of period			—			(207)			(207)						—			(80)			(80)
Additional Level III information:
Total (losses) gains included in earnings before income taxes			—			(41)			(41)						—			70			70
Unrealized (losses) gains included in earnings before income taxes relating to net assets (liabilities) held at period end			—			(54)			(54)						—			67			67

As at March 31, 2025, the total Level III risk management asset balance was $100 million (Dec. 31, 2024 – $110 million) and the Level III risk management liability balance was $307 million (Dec. 31, 2024 – $263 million). The net risk management liabilities increased mainly due to market price changes offset by settled contracts.

The information on risk management contracts or groups of risk management contracts that are included in Level III measurements and the related unobservable inputs and sensitivities are outlined in the following table.

These include the effects on fair value of discounting, liquidity and credit value adjustments; however, the potential offsetting effects of Level II positions are not considered. Sensitivity ranges for the base fair values are

determined using reasonably possible alternative assumptions for the key unobservable inputs, which may include forward commodity prices, volatility in commodity prices and correlations, delivery volumes, escalation rates and cost of supply.

Included in the Level III classification are several long-term wind energy sales, including contracts for differences and virtual power purchase agreements, that are recognized as derivatives for accounting purposes. The sensitivity reflects the potential impacts on the fair value of these long-term wind agreements. These long-term wind energy sales are backed by physical assets to effectively reduce our market risk.

F16 TransAlta Corporation

As at

March 31, 2025

Description

Valuation technique

Unobservable input

Reasonably possible change

Sensitivity(1)

Long-term wind energy sale — Eastern U.S.

Long-term price forecast

Illiquid future power prices (per MWh)

Price decrease or increase of US$6

+44

Illiquid future REC(2) prices (per unit)

Price decrease of US$12 or increase of US$8

Wind discounts

0% decrease or 6% increase

-32

Long-term wind energy sale — Canada

Long-term price forecast

Illiquid future power prices (per MWh)

Price decrease of $61 or increase of $10

+72

Wind discounts

15% decrease or 5% increase

-19

Long-term wind energy sale — Central U.S.

Long-term price forecast

Illiquid future power prices (per MWh)

Price decrease of US$4 or increase of US$3

+74

Wind discounts

2% decrease or 2% increase

-92

(1)Sensitivity represents the total increase or decrease in recognized fair value that could arise from the use of the reasonably possible changes of all unobservable inputs.

(2)Renewable energy credits.

As at

Dec. 31, 2024

Description

Valuation technique

Unobservable input

Reasonably possible change

Sensitivity(1)

Long-term wind energy sale — Eastern U.S.

Long-term price forecast

Illiquid future power prices (per MWh)

Price decrease or increase of US$6

+42

Illiquid future REC(2) prices (per unit)

Price decrease of US$12 or increase of US$8

Wind discounts

0% decrease or 6% increase

-30

Long-term wind energy sale — Canada

Long-term price forecast

Illiquid future power prices (per MWh)

Price decrease of $57 or increase of $10

+53

Wind discounts

15% decrease or 5% increase

-17

Long-term wind energy sale — Central U.S.

Long-term price forecast

Illiquid future power prices (per MWh)

Price decrease of US$4 or increase of US$3

+84

Wind discounts

2% decrease or 2% increase

-77

(1)Sensitivity represents the total increase or decrease in recognized fair value that would arise from the use of the reasonably possible changes of all unobservable inputs.

(2)Renewable energy credits.

TransAlta Corporation F17

a. Long-Term Wind Energy Sale – Eastern U.S.

The Company is party to a long-term contract for differences (CFD) for the offtake of 100 per cent of the generation from its 90 MW Big Level wind facility. The CFD, together with the sale of electricity generated into the PJM Interconnection at the prevailing real-time energy market price, achieve the fixed contract price per MWh on proxy generation. Under the CFD, if the market price is lower than the fixed contract price, the customer pays the Company the difference and if the market price is higher than the fixed contract price, the Company refunds the difference to the customer. The customer is also entitled to the physical delivery of environmental attributes. The contract matures in December 2034. The contract is accounted for as a derivative with changes in fair value presented in revenue.

b. Long-Term Wind Energy Sale – Canada

The Company is party to two Virtual Power Purchase Agreements (VPPAs) for the offtake of 100 per cent of the generation from its 130 MW Garden Plain wind facility. The VPPAs, together with the sale of electricity generated into the Alberta power market at the pool price, achieve the fixed contract prices per MWh. Under the VPPAs, if the pool price is lower than the fixed contract price, the customer pays the Company the difference and if the pool price is higher than the fixed contract price, the Company refunds the difference to the customer. Customers are also entitled to the physical delivery of environmental attributes. Both VPPAs commenced on commercial operation of the facility in August 2023, and extend for a weighted average period of approximately 17 years.

The energy components of these contracts are accounted for as derivatives, with changes in fair value presented in revenue.

c. Long-Term Wind Energy Sale – Central U.S.

The Company is party to two long-term VPPAs for the offtake of 100 per cent of the generation from its 302 MW White Rock East and White Rock West wind power facilities. The VPPAs, together with the sale of electricity generated into the U.S. Southwest Power Pool (SPP)

market at the relevant price nodes, achieve the fixed contract prices per MWh. Under the VPPAs, if the SPP pricing is lower than the fixed contract price the customer pays the Company the difference, and if the SPP pricing is higher than the fixed contract price, the Company refunds the difference to the customer. The customer is also entitled to the physical delivery of environmental attributes. The VPPAs commenced on commercial operation of the facilities in the first quarter of 2024.

The Company is also party to a VPPA for the offtake of 100 per cent of the generation from its 202 MW Horizon Hill wind power project. The VPPA, together with the sale of electricity generated into the SPP market at the relevant price node, achieve the fixed contract price per MWh. Under the VPPA, if the SPP pricing is lower than the fixed contract price, the customer pays the Company the difference and if the SPP pricing is higher than the fixed contract price, the Company refunds the difference to the customer. The customer is also entitled to the physical delivery of environmental attributes. The VPPA commenced on commercial operation of the facility in the second quarter of 2024.

The energy components of these contracts are accounted for as derivatives, with changes in fair value presented in revenue.

III. Other Risk Management Assets and Liabilities

Other risk management assets and liabilities primarily include risk management assets and liabilities that are used to manage exposures on non-energy marketing transactions such as interest rates, the net investment in foreign operations and other foreign currency risks. Hedge accounting is not always applied.

Other risk management assets and liabilities with a total net asset fair value of $5 million as at March 31, 2025 (Dec. 31, 2024 – $4 million net liability) are classified as Level II fair value measurements.

F18 TransAlta Corporation

IV. Other Financial Assets and Liabilities

						Fair value(1)									Total carrying value(1)
						Level II			Level III			Total
Exchangeable securities — March 31, 2025						746			—			746			750
Long-term debt — March 31, 2025						3,515			—			3,515			3,725
Long-term financial assets — March 31, 2025(2)						—			105			105			105
Loan receivable — March 31, 2025(3)						28			—			28			28
Exchangeable securities — Dec. 31, 2024						739			—			739			750
Long-term debt — Dec. 31, 2024						3,447			—			3,447			3,657
Loan receivable — Dec. 31, 2024(3)						25			—			25			25

(1)Includes current portion.

(2)Refer to Note 10 for further details.

(3)Included within Other assets.

During the first quarter of 2025, the Company made available a US$75 million term loan, which is convertible to equity at any time, and a US$100 million revolving facility (collectively, ‘the Nova facilities’) to Nova. Refer to Note 10 for more details. The Nova facilities are classified as financial assets measured at FVTPL. The fair value of the Nova facilities are categorized as Level 3 in the fair value hierarchy as their fair value is determined using multiple inputs such as volatility and share price for which observable market data is not available. The Nova facilities are valued at the exchange amount, which represents the amounts drawn. There have been no material movements in the fair value to the end of the reporting period.

The fair values of the Company’s debentures, senior notes and exchangeable securities are determined using prices

observed in secondary markets. Non-recourse and other long-term debt fair values are determined by calculating an implied price based on a current assessment of the yield to maturity.

The carrying amount of other short-term financial assets and liabilities (cash and cash equivalents, restricted cash, trade accounts receivable, collateral provided, bank overdraft, accounts payable and accrued liabilities, collateral held and dividends payable) approximates fair value due to the liquid nature of the asset or liability. The fair values of the long-term financial assets and finance lease receivables approximate the carrying amounts as the amounts receivable represent cash flows from repayments of principal and interest.

TransAlta Corporation F19

C. Inception Gains and Losses

The majority of derivatives traded by the Company are based on adjusted quoted prices on an active exchange or extend beyond the time period for which exchange-based quotes are available. The fair values of these derivatives are determined using inputs that are not readily observable. Refer to section B of this Note 11 above for fair value Level III valuation techniques used. In some instances, a difference may arise between the fair value of a financial instrument at initial recognition (the transaction price) and the amount calculated through a valuation model. This unrealized gain or loss at inception is recognized in net earnings (loss) only if the fair value of

the instrument is evidenced by a quoted market price in an active market, observable current market transactions that are substantially the same, or a valuation technique that uses observable market inputs. Where these criteria are not met, the difference is deferred on the condensed consolidated statements of financial position in risk management assets or liabilities and is recognized in net earnings (loss) over the term of the related contract. Effective January 1, 2025, the difference is calibrated at initial recognition and no inception gains or losses are recognized.

The difference between the transaction price and the fair value determined using a valuation model, yet to be recognized in net earnings (loss) and a reconciliation of changes is as follows:

3 months ended March 31						2025						2024
Unamortized net gain at beginning of period						11						3
New inception gains						—						4
Change in foreign exchange rates						—						(1)
Amortization recorded in net earnings during the period						(5)						8
Unamortized net gain at end of period						6						14

F20 TransAlta Corporation

12. Risk Management Activities

A. Risk Management Strategy

The Company is exposed to market risk from changes in commodity prices, foreign exchange rates, interest rates, credit risk and liquidity risk. These risks affect the Company’s earnings and the value of associated financial instruments that the Company holds. In certain cases, the Company seeks to minimize the effects of these risks by using derivatives to hedge its risk exposures. The

Company’s risk management strategy, policies and controls are designed to ensure that the risks it assumes comply with the Company’s internal objectives and risk tolerance. Refer to Note 15 of the 2024 audited annual consolidated financial statements for further details of the Company's risk management activities.

B. Net Risk Management Assets and Liabilities

Aggregate net risk management assets (liabilities) are as follows:

As at March 31, 2025
			Cash flow hedges						Not designated as a hedge			Total
Commodity risk management
Current			34						29			63
Long-term			—						(232)			(232)
Net commodity risk management assets (liabilities)			34						(203)			(169)
Other
Current			—						(1)			(1)
Long-term			—						6			6
Net other risk management liabilities			—						5			5
Total net risk management assets (liabilities)			34						(198)			(164)

As at Dec. 31, 2024
			Cash flow hedges						Not designated as a hedge			Total
Commodity risk management
Current			45						8			53
Long-term			—						(220)			(220)
Net commodity risk management assets (liabilities)			45						(212)			(167)
Other
Current			—						(12)			(12)
Long-term			—						8			8
Net other risk management liabilities			—						(4)			(4)
Total net risk management assets (liabilities)			45						(216)			(171)

TransAlta Corporation F21

C. Nature and Extent of Risks Arising from Financial Instruments

I. Market Risk

i. Commodity Price Risk – Proprietary Trading

The Company’s Energy Marketing segment conducts proprietary trading activities and uses a variety of instruments to manage risk, earn trading revenue and gain market information.

A VaR measure gives, for a specific confidence level, an estimated maximum pre-tax loss that could be incurred over a specified period of time. VaR is used to determine the potential change in value of the Company’s proprietary trading portfolio, over a three-day period within a 95 per cent confidence level, resulting from normal market fluctuations. Changes in market prices associated with proprietary trading activities affect net earnings in the period that the price changes occur. VaR at March 31, 2025, associated with the Company’s proprietary trading activities was $1 million (Dec. 31, 2024 — $3 million).

ii. Commodity Price Risk – Generation 

The generation segments utilize various commodity contracts to manage the commodity price risk associated with electricity generation, fuel purchases, emissions and byproducts, as considered appropriate. A Commodity Exposure Management Policy is prepared and approved annually, which outlines the intended hedging strategies associated with the Company’s generation assets and related commodity price risks. Controls also include

restrictions on authorized instruments, management reviews on individual portfolios and approval of asset transactions that could add potential volatility to the Company’s reported net earnings.

VaR at March 31, 2025, associated with the Company’s commodity derivative instruments used in generation hedging activities was $10 million (Dec. 31, 2024 — $8 million). For positions and economic hedges that do not meet hedge accounting requirements or for short-term optimization transactions such as buybacks entered into to offset existing hedge positions, these transactions are marked to the market value with changes in market prices associated with these transactions affecting net earnings in the period in which the price change occurs. VaR at March 31, 2025, associated with these transactions was $10 million (Dec. 31, 2024 — $13 million). For the market risk related to long-term power sale and long-term wind energy sales contracts, refer to the Level III measurements table and the related unobservable inputs and sensitivities in Note 11(B)(II).

II. Credit Risk

The Company uses external credit ratings, as well as internal ratings in circumstances where external ratings are not available, to establish credit limits for customers and counterparties.

The following table outlines the Company’s maximum exposure to credit risk without taking into account collateral held, including the distribution of credit ratings, as at March 31, 2025:

			Investment grade  (per cent)			Non-investment grade  (per cent)			Total  (per cent)			Total amount
Trade and other receivables(1)			86			14			100			873
Long-term finance lease receivable			100			—			100			297
Risk management assets(1)			52			48			100			407
Long-term financial assets(2)			—			100			100			105
Loans receivable(3)			—			100			100			28
Total												1,710

(1)Letters of credit and cash and cash equivalents are the primary types of collateral held as security related to these amounts.

(2)Included within long-term financial assets with counterparties that have no external credit rating. Refer to Note 10 for further details.

(3)Includes $28 million loans receivable included within other assets with counterparties that have no external credit rating.

The Company did not have material expected credit losses as at March 31, 2025. The Company’s maximum exposure to credit risk at March 31, 2025, without taking into account collateral held or right of set-off, is represented by the current carrying amounts of receivables, risk management assets, and long-term financial assets as per the condensed consolidated statements of financial position. Letters of credit, cash, and first priority liens on

assets are the primary types of collateral held as security related to these amounts. The maximum credit exposure to any one customer for commodity trading operations and hedging, including the fair value of open trading, net of any collateral held, at March 31, 2025, was $69 million (Dec. 31, 2024 — $77 million).

F22 TransAlta Corporation

III. Liquidity Risk

The Company has sufficient existing liquidity available to meet its upcoming debt maturities. The next major debt repayment is scheduled for the fourth quarter of 2029. Our highly diversified asset portfolio, by both fuel type and operating region, and our long-term contracted asset base provide stability in our cash flows.

Liquidity risk relates to the Company’s ability to access capital to be used for capital projects, debt refinancing, proprietary trading activities, commodity hedging and general corporate purposes.

A maturity analysis of the Company's financial liabilities is as follows:

			2025			2026			2027			2028			2029			2030 and thereafter			Total
Accounts payable, accrued liabilities and other current liabilities			751			—			—			—			—			—			751
Credit facilities and long-term debt(1)			139			169			330			362			821			1,940			3,761
Exchangeable securities(2)			—			—			—			—			—			750			750
Commodity risk management (assets) liabilities(3)			(70)			2			4			5			1			227			169
Other risk management assets			(2)			—			—			—			(1)			(2)			(5)
Lease liabilities			4			5			5			5			5			128			152
Interest on credit facilities, long-term debt and lease liabilities(4)			168			212			203			180			161			711			1,635
Interest on exchangeable securities(2)(4)			40			53			53			52			12			—			210
Dividends payable			37			—			—			—			—			—			37
Total			1,067			441			595			604			999			3,754			7,460

(1)Excludes impact of hedge accounting and derivatives.

(2)The exchangeable debentures are due May 1, 2039 and the exchangeable preferred shares are perpetual. However, a cash payment could occur after Dec. 31, 2028, at the Company's option, if the exchangeable securities are not exchanged by Brookfield Renewable Partners or its affiliates (collectively Brookfield). At Brookfield's option, the exchangeable securities are currently exchangeable into an equity ownership interest in TransAlta’s Alberta Hydro Assets.

(3)Negative amount represents a receivable position or cash inflow.

(4)Not recognized as a financial liability on the condensed consolidated statements of financial position and excludes the impact of interest rate swaps.

TransAlta Corporation F23

D.Collateral

I. Financial Assets Provided as Collateral

At March 31, 2025, the Company provided $148 million (Dec. 31, 2024 — $124 million) in cash and cash equivalents as collateral to regulated clearing agents as security for commodity trading activities. These funds are held in segregated accounts by the clearing agents. Collateral provided is included within trade and other receivables in the condensed consolidated statements of financial position. At March 31, 2025, the Company provided $21 million (Dec. 31, 2024 — $21 million) in surety bonds as security for commodity trading activities.

II. Financial Assets Held as Collateral 

At March 31, 2025, the Company held $21 million (Dec. 31, 2024 — $9 million) in cash collateral associated with counterparty obligations. Under the terms of the contracts, the Company may be obligated to pay interest on the outstanding balances and to return the principal when the counterparties have met their contractual obligations or when the amount of the obligation declines as a result of changes in market value. Interest payable to the counterparties on the collateral received is calculated

in accordance with each contract. Collateral held is related to physical and financial derivative transactions in a net asset position and is included in accounts payable and accrued liabilities in the condensed consolidated statements of financial position.

III. Contingent Features in Derivative Instruments 

Collateral is posted in the normal course of business based on the Company’s senior unsecured credit rating as determined by certain major credit rating agencies. Certain of the Company’s derivative instruments contain financial assurance provisions that require collateral to be posted only if a material adverse credit-related event occurs.

At March 31, 2025, the Company had posted collateral of $397 million (Dec. 31, 2024 — $424 million) in the form of letters of credit on physical and financial derivative transactions in a net liability position. Certain derivative agreements contain credit-risk-contingent features, which if triggered could result in the Company having to post an additional $101 million (Dec. 31, 2024 — $128 million) of collateral to its counterparties.

13. Property, Plant and Equipment

During the three months ended March 31, 2025, the Company had additions of $32 million, mainly related to major maintenance for various projects in the Gas, Wind and Solar and Hydro segments.

During the three months ended March 31, 2025, the Company did not capitalize any interest to property, plant,

and equipment (PP&E). At March 31, 2024, the Company capitalized $14 million interest to PP&E at a weighted average rate of 6.5 per cent.

F24 TransAlta Corporation

14. Credit Facilities, Long-Term Debt and Lease Liabilities

A. Amounts Outstanding

The Company's credit facilities are summarized in the table below:

As at March 31, 2025						Utilized
Credit facilities			Facility size			Outstanding letters of credit(1)			Cash drawings			Available capacity			Maturity date
Committed
Syndicated credit facility			1,950			372			199			1,379			Q2 2028
Bilateral credit facilities			240			167			—			73			Q2 2026
Heartland credit facilities			276			26			224			26			Q4 2027
Heartland EDC letter of credit facility			30			14			—			16			Q4 2025
Total committed			2,496			579			423			1,494
Non-committed
Demand facilities			400			220			—			180			N/A
Total Non-committed			400			220			—			180

(1)TransAlta has obligations to issue letters of credit and cash collateral to secure potential liabilities to certain parties, including those related to potential environmental obligations, commodity risk management and hedging activities, pension plan obligations, construction projects and purchase obligations. Letters of credit drawn against the non-committed facilities reduce the available capacity under the committed syndicated credit facilities. At March 31, 2025, TransAlta provided cash collateral of $148 million.

Credit facilities are the primary source of short-term liquidity after internally generated cash flow. The Company is in compliance with the terms of its credit facilities and all undrawn amounts are fully available. Letters of credit in the amount of $220 million were issued from non-committed demand facilities which are fully backstopped, thereby reducing the available capacity on the committed credit facilities. In addition to the net $1.3 billion of committed capacity available under the credit facilities, the Company had $238 million of available cash and cash equivalents as at March 31, 2025.

TransAlta's debt has terms and conditions, including financial covenants, that are considered ordinary and customary. As at March 31, 2025, the Company was in compliance with all of its debt covenants.

B.Senior Notes Offering

On March 24, 2025, the Company issued $450 million of senior notes with a fixed annual coupon of 5.625 per cent, maturing on March 24, 2032. The notes are unsecured and rank equally in right of payment with all existing and future senior indebtedness and senior in right of payment to all future subordinated indebtedness. Interest payments on the notes are made semi-annually, on March 24 and Sept. 24, with the first payment commencing Sept. 24, 2025.

C. Term Loan Facility Early Repayment

On March 25, 2025, the Company repaid its $400 million variable rate term loan facility in advance of the scheduled maturity date of Sept. 7, 2025, with the proceeds received from the $450 million senior notes offering.

D. Restrictions Related to Non-Recourse Debt and Other Debt

The Melancthon Wolfe Wind LP, Pingston Power Inc., TAPC Holdings LP, New Richmond Wind LP, Kent Hills Wind LP, TEC Hedland Pty Ltd. and Windrise Wind LP non-recourse bonds, the TransAlta OCP LP bond, and Heartland credit facilities, with a total carrying value of $1.7 billion as at March 31, 2025 (Dec. 31, 2024 — $1.8 billion), are subject to customary financing conditions and covenants that may restrict the Company’s ability to access funds generated by the facilities’ operations. Upon meeting certain distribution tests, typically performed once per quarter, the funds can be distributed by the subsidiary entities to their respective parent entity. These conditions include meeting a debt service coverage ratio prior to distribution, which was met by these entities in the first quarter of 2025. The funds in the entities will remain there until the next debt service coverage ratio can be performed in the second quarter of 2025. At March 31, 2025, $85 million (Dec. 31, 2024 — $117 million) of cash was subject to these financial restrictions.

TransAlta Corporation F25

At March 31, 2025, $5 million (AU$6 million) of funds held by TEC Hedland Pty Ltd. cannot be accessed by other corporate entities, as the funds must be solely used by the project entities, for the purpose of paying major maintenance costs.

Additionally, certain non-recourse bonds require that certain reserve accounts be established and funded through cash held on deposit and/or by providing letters of credit.

E. Restricted Cash

As at March 31, 2025, the Company had nil (Dec. 31, 2024 — $17 million) of restricted cash related to the TransAlta OCP bonds, which is required to be held in a debt service reserve account in the third and fourth quarters of the year to fund scheduled future debt repayments. The Company also had $51 million (Dec. 31, 2024 — $52 million) of restricted cash related to the TEC Hedland Pty Ltd bond. These cash reserves are required to be held under commercial arrangements and for debt service, which may be replaced by letters of credit in the future.

15. Common Shares

A. Issued and Outstanding

TransAlta is authorized to issue an unlimited number of voting common shares without nominal or par value.

3 months ended March 31			2025									2024
			Common shares  (millions)			Amount						Common shares (millions)			Amount
Issued and outstanding, beginning of period			297.5			3,179						306.9			3,285
Reversal of provision for repurchase of common shares under ASPP			—			—						1.7			19
Purchased and cancelled under the NCIB(1)			(0.3)			(3)						(3.5)			(37)
Share-based payment plans			0.9			7						0.7			10
Stock options exercised			—			—						0.7			3
Issued and outstanding, end of year, prior to ASPP			298.1			3,183						306.5			3,280
Provision for repurchase of common shares under ASPP			(1.5)			(20)						(2.5)			(22)
Issued and outstanding, end of period			296.6			3,163						304.0			3,258

(1)Shares purchased by the Company under the NCIB (as defined below) are recognized as a reduction to share capital equal to the average carrying value of the common shares. Any difference between the aggregate purchase price and the average carrying value of the common shares is recorded in retained earnings (deficit).

B. Normal Course Issuer Bid (NCIB) Program

The effects of the Company's purchase and cancellation of common shares during the period are as follows:

3 months ended March 31			2025						2024
Total shares purchased(1)			294,200						3,460,300
Average purchase price per share			13.59						9.36
Total cost ($ millions)			4						32
Book value of shares cancelled			3						37
Amount recorded in deficit			(1)						5

(1)The three months ended March 31, 2025 include 74,600 shares (March 31, 2024 — 300,000 shares) that were repurchased but were not cancelled due to timing differences between the transaction date and settlement date. As a result, $1 million (2024 — $2 million) was paid subsequent to period end.

F26 TransAlta Corporation

On March 25, 2025, the Company entered into an Automatic Securities Purchase Plan (ASPP) which permits an independent broker to repurchase shares under the NCIB during the first quarter blackout period through to the end of the ASPP. The Company has recognized a provision of $20 million for the repurchase of common share under the ASPP within accounts payable and accrued liabilities as at March 31, 2025, as an estimate of the maximum aggregate purchase amount that could be achieved during the blackout period.

C. Dividends

On Feb. 20, 2025, the Company declared a quarterly dividend of $0.065 per common share, payable on July 1, 2025. There have been no other transactions involving common shares between the reporting date and the date of completion of these condensed consolidated financial statements.

16. Preferred Shares

A. Issued and Outstanding

All preferred shares issued and outstanding are non-voting cumulative redeemable fixed or floating rate first preferred shares.

			March 31, 2025									Dec. 31, 2024
Series(1)			Number of shares  (millions)			Amount						Number of shares (millions)			Amount
Series A			9.6			235						9.6			235
Series B			2.4			58						2.4			58
Series C			10.0			243						10.0			243
Series D			1.0			26						1.0			26
Series E			9.0			219						9.0			219
Series G			6.6			161						6.6			161
Issued and outstanding, end of period			38.6			942						38.6			942

(1)The Series I Preferred Shares are accounted for as long-term debt.

On April 23, 2025, the Company declared a quarterly dividend of $0.17981 per share on the Series A preferred shares, $0.30342 per share on the Series B preferred shares, $0.36588 per share on the Series C preferred

shares, $0.37011 per share on the Series D preferred shares, $0.43088 per share on the Series E preferred shares and $0.42331 per share on the Series G preferred shares, payable on June 30, 2025.

TransAlta Corporation F27

17. Commitments and Contingencies

While the Company has not incurred any additional material contractual commitments in the three months ended March 31, 2025, either directly or through its interests in joint operations and joint ventures, there were

reductions to the expected future payments under the Company's long-term service agreements in the three months ended March 31, 2025.

Total revised approximate future payments under the long-term service agreements are as follows:

			2025			2026			2027			2028			2029			2030 and thereafter			Total
Long-term service agreements			50			44			42			26			14			128			304

Refer to the commitments disclosed in Note 37 of the 2024 audited annual consolidated financial statements.

Commitments

Natural Gas, Transportation and Other Contracts 

The Company has natural gas transportation contracts, for a total of up to 400 terajoules (TJ) per day on a firm basis, related to the Sundance and Keephills facilities, ending in 2036 to 2038. In addition, the Company has natural gas transportation agreements for approximately 150 TJ per day for Sheerness. The Company currently expects to use approximately 160 TJ per day on average and up to approximately 450 TJ per day during peak periods, while remarketing the excess capacity.

Long-Term Service Agreements 

TransAlta has various service agreements in place, primarily for inspections, repairs and maintenance that may be required on natural gas facilities and turbines at various wind facilities.

Contingencies

TransAlta is occasionally named as a party in various claims and legal and regulatory proceedings that arise during the normal course of its business. The Company reviews each of these claims, including the nature of the claim, the amount in dispute or claimed and the availability of insurance coverage. There can be no assurance that any particular claim will be resolved in the Company’s favour or that such claims may not have a material adverse effect on TransAlta. Inquiries from regulatory bodies may also arise in the normal course of business, to which the Company responds as required. Refer to Note 37 of the 2024 audited annual consolidated financial statements for the current material outstanding contingencies. There were no material changes to the contingencies in the three months ended March 31, 2025.

18. Segment Disclosures

A. Description of Reportable Segments 

The Company has six reportable segments as described in Note 1 of the Company's 2024 audited annual consolidated financial statements. The Gas reportable segment includes Heartland, which was acquired on Dec. 4, 2024. Refer to Note 4 of the 2024 audited annual consolidated financial statements for further details of the Heartland Generation business acquisition and preliminary purchase price allocation. There were no adjustments made to the preliminary purchase price allocation as at March 31, 2025.

The following tables provides each segment's results in the format that the TransAlta’s President and Chief Executive Officer (the chief operating decision maker) (CODM) reviews the Company's segments to make

operating decisions and assess performance. The tables below show the reconciliation of the total segmented results and adjusted EBITDA to the statement of earnings reported under IFRS.

For internal reporting purpose, the earnings information from the Company's investment in Skookumchuck has been presented in the Wind and Solar segment on a proportionate basis. Information on a proportionate basis reflects the Company's share of Skookumchuck's statement of earnings on a line-by-line basis. Proportionate financial information is not and is not intended to be, presented in accordance with IFRS. Under IFRS, the investment in Skookumchuck has been accounted for as a joint venture using the equity method.

F28 TransAlta Corporation

B. Reported Adjusted Segment Earnings and Segment Assets

I. Reconciliation of Adjusted EBITDA to Earnings before Income Tax

3 months ended March 31, 2025						Hydro						Wind &  Solar(1)						Gas						Energy Transition						Energy Marketing						Corporate						Total						Equity- accounted investments(1)						Reclass  adjustments						IFRS financials
Revenues						86						107						390						154						27						1						765						(7)						—						758
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss						(21)						36						(32)						(1)						1						—						(17)						—						17						—
Decrease in finance lease receivable						—						1						7						—						—						—						8						—						(8)						—
Finance lease income						—						1						5						—						—						—						6						—						(6)						—
Revenues from Planned Divestitures						—						—						(4)						—						—						—						(4)						—						4						—
Adjusted revenue						65						145						366						153						28						1						758						(7)						7						758
Fuel and purchased power						4						10						163						98						—						2						277						—						—						277
Reclassifications and adjustments:
Fuel and purchased power related to Planned Divestitures						—						—						(2)						—						—						—						(2)						—						2						—
Adjusted fuel and purchased power						4						10						161						98						—						2						275						—						2						277
Carbon compliance						—						1						49						—						—						(1)						49						—						—						49
Adjusted gross margin						61						134						156						55						28						—						434						(7)						5						432
OM&A						13						29						59						17						7						49						174						(1)						—						173
Reclassifications and adjustments:
OM&A related to the Planned Divestitures						—						—						(2)						—						—						—						(2)						—						2						—
ERP integration costs						—						—						—						—						—						(4)						(4)						—						4						—
Acquisition-related transaction and restructuring costs						—						—						—						—						—						(4)						(4)						—						4						—
Adjusted OM&A						13						29						57						17						7						41						164						(1)						10						173
Taxes, other than income taxes						1						5						5						1						—						—						12						—						—						12
Net other operating income						—						(4)						(10)						—						—						—						(14)						—						—						(14)
Reclassifications and adjustments:
Insurance recovery						—						2						—						—						—						—						2						—						(2)						—
Adjusted net other operating income						—						(2)						(10)						—						—						—						(12)						—						(2)						(14)
Adjusted EBITDA(2)						47						102						104						37						21						(41)						270
Depreciation and amortization																																																												(146)
Equity income																																																												2
Interest income																																																												5
Interest expense																																																												(93)
Foreign exchange loss																																																												(4)
Finance lease income																																																												6
Fair value change in contingent consideration																																																												34
Asset impairment charges																																																												(15)
Loss on sale of assets and other																																																												(1)
Earnings before income taxes																																																												49

(1)The Skookumchuck wind facility has been included on a proportionate basis in the Wind and Solar segment.

(2)Adjusted EBITDA is not defined, has no standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers. During the first quarter of 2025, our Adjusted EBITDA composition was amended to exclude the impact of realized gain (loss) on closed exchange positions.

TransAlta Corporation F29

3 months ended March 31, 2024						Hydro						Wind &  Solar(1)						Gas						Energy Transition						Energy Marketing						Corporate						Total						Equity- accounted investments(1)						Reclass adjustments						IFRS financials
Revenues						112						139						433						217						52						—						953						(6)						—						947
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss						(5)						(21)						(91)						(6)						(3)						—						(126)						—						126						—
Decrease in finance lease receivable						—						1						4						—						—						—						5						—						(5)						—
Finance lease income						—						1						1						—						—						—						2						—						(2)						—
Unrealized foreign exchange gain on commodity						—						—						(1)						—						—						—						(1)						—						1						—
Adjusted revenues						107						120						346						211						49						—						833						(6)						120						947
Fuel and purchased power						6						9						142						166						—						—						323						—						—						323
Carbon compliance						—						—						40						—						—						—						40						—						—						40
Adjusted gross margin						101						111						164						45						49						—						470						(6)						120						584
OM&A						13						20						46						18						10						28						135						(1)						—						134
Reclassifications and adjustments:
Acquisition-related transaction and restructuring costs						—						—						—						—						—						(3)						(3)						—						3						—
Adjusted OM&A						13						20						46						18						10						25						132						(1)						3						134
Taxes, other than income taxes						1						4						3						—						—						—						8						—						—						8
Net other operating income						—						(2)						(10)						—						—						—						(12)						—						—						(12)
Adjusted EBITDA(2)(3)						87						89						125						27						39						(25)						342
Depreciation and amortization																																																												(124)
Equity income																																																												1
Interest income																																																												7
Interest expense																																																												(69)
Foreign exchange loss(4)																																																												(5)
Finance lease income																																																												2
Asset impairment charges																																																												(1)
Gain on sale of assets(4)																																																												2
Earnings before income taxes																																																												267

(1)The Skookumchuck wind facility has been included on a proportionate basis in the Wind and Solar segment.

(2)Adjusted EBITDA is a non-IFRS measures, is not defined, have no standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers.

(3)During the first quarter of 2025, our Adjusted EBITDA composition was amended to exclude the impact of realized gain (loss) on closed exchange positions and Australian interest income. During the second quarter of 2024, our Adjusted EBITDA composition was amended to exclude the impact of acquisition-related transaction and restructuring costs. Therefore, the Company has applied this composition to all previously reported periods.

(4)Foreign exchange loss and other of $3 million reported in the first quarter of 2024 was broken down to conform to the current period presentation.

F30 TransAlta Corporation

19. Related-Party Transactions

Transactions with Associates

In connection with the exchangeable securities issued to Brookfield, the Investment Agreement entitles Brookfield to nominate two directors to the TransAlta Board. This allows Brookfield to participate in the financial and operating policy decisions of the Company, and as such, they are considered associates of the Company.

The Company may, in the normal course of operations, enter into transactions on market terms with associates

that have been measured at exchange value and recognized in the condensed consolidated financial statements, including power purchase and sale agreements, derivative contracts and asset management fees. Transactions and balances between the Company and associates do not eliminate. Refer to Note 26 and 36 of the 2024 audited annual consolidated financial statements.

Transactions with Brookfield include the following:

			3 months ended March 31
Year ended Dec. 31			2025			2024
Power sales			28			21
Purchased power			—			3

TransAlta Corporation F31